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Is It Time to Reconsider Performance Appraisals?

Performance appraisals are a staple of performance management. Most companies — 88% of U.S. employers — conduct them at least once a year, reports the Society for Human Resource Management (SHRM). Even so, performance appraisals are typically less productive than they could be for employees and supervisors.

Room for improvement

A 2014 SHRM survey found that a majority of HR professionals believe their performance management processes could be better. In the survey of 400 U.S. HR professionals, only 2% gave their organizations an A grade for their method of handling performance management. The majority — 53% — gave their organization a grade between C+ and B, followed by 21% who rated their organization a solid C. HR and workplace management experts agree that there is definite room for improvement.

Samuel Culbert, a management professor at UCLA and leading researcher on dysfunctional management practices, received an outpouring of support from employees and managers alike in response to his article “Get Rid of the Performance Review!” In the article, Culbert criticized performance reviews as one-sided forms of employee intimidation that create defensiveness instead of engaging and motivating employees. “They’re fraudulent, bogus, and dishonest. And second, they’re indicative of and they support bad management,” Culbert says.

Performance appraisal pitfalls

There are many reasons why “traditional” yearly performance reviews can be ineffective. Here are a few of the most common pitfalls of such reviews:

  • Performance reviews typically place employees in a defensive position, essentially negating the opportunity for meaningful and productive dialogue between managers and their team members.
  • Performance appraisals may reward conformity and mediocrity. They tend not to value or encourage engaged, passionate employees who are willing to take risks and try novel approaches that could greatly benefit the organization.
  • Performance reviews often don’t help managers to differentiate between poor, average, and excellent performers. Managers themselves may resist confronting employees about performance issues. In the SHRM survey, more than one-third of respondents said managers were unwilling or unable to “make tough calls” in performance reviews to directly instruct employees when improvements are necessary.
  • Annual performance reviews don’t adequately demonstrate how an employee’s appraisal is part of the organization’s overall performance management strategy. Because employees have not received continuous performance feedback during the year, they’re unaware of how their performance affects other team members and the organization — and thus the annual review may come as a shock.

Performance appraisal best practices

Assessing employee performance is a necessity. Without such assessment review, companies cannot effectively manage their workforce’s performance. However, you can take the following five steps to change the dynamic of performance appraisals to a collaborative exercise that motivates employees.

  1. Make performance appraisals an ongoing process. Give employees regular, constructive, and consistent feedback during the year rather than saving everything for one appraisal meeting.
  2. Reward passionate employees for their engagement instead of criticizing or punishing them. Innovation and excellence cannot be achieved in the workplace without engaged employees whose contributions exceed expectations.
  3. Empower employees through coaching, meaningful dialog about performance, straightforward instructions for improvement, and by helping them understand the impact of their individual performance on their team and the organization.
  4. Assess employee performance fairly and objectively. Some examples of objective measurements could include goals attained, successful projects completed, or clearly communicated metrics that have been achieved.
  5. Separate performance appraisals from salary increase discussions. While salary increases may be tied to an employee’s overall performance, keeping salary discussions out of performance appraisals reduces stress and distraction for employees, allowing them to better focus on the actions requested in the appraisal.
  6. Collaborate with your employees to develop performance goals that contribute to overall company success. Good goals should be specific and motivated by a vision or plan that the employees take action on. Such goals should engage the employee and drive them to advance their skills and performance.

When used wisely, the appraisal process can help managers guide employees to their best performance and greatest achievements.

Content provided by The Payroll Company HR Support Center.